The Vanishing Middle Ground: Disappearing Jobs | The Canadian Encyclopedia


The Vanishing Middle Ground: Disappearing Jobs

For the past 32 years, Gary Bragnalo has worked at the Abitibi-Bowater paper mill in Thunder Bay, Ont.

This article was originally published in Maclean's Magazine on February 9, 2009

The Vanishing Middle Ground: Disappearing Jobs

For the past 32 years, Gary Bragnalo has worked at the Abitibi-Bowater paper mill in Thunder Bay, Ont. As a day crew leader, he earns $31 an hour, just enough to enjoy the middle-class dream: a house, a car, and a trailer on Crystal Lake about an hour outside the city, where his family takes summer vacations. Bragnalo, who's 50, has put one daughter through university and is helping his second do the same. "It's a good living," he says. "It's not the best living, but it's a good living."

But next month, along with hundreds of other workers, he'll be temporarily laid off when the mill shuts down for three or four weeks. Bragnalo is thinking of using up some vacation time and then going on EMPLOYMENT INSURANCE to get through the down time, but he sees more trouble ahead. For years, jobs have been disappearing. The mill, facing fewer customers for its newsprint, has already cut 900 positions in the last decade, and if the plant shuts down for good, he's too young to retire. If things get worse, he'll head west in search of work, he says. He's already brushing up his resumé. After decades living a solid, middle-class existence, Bragnalo is at risk of watching it all slip away. "You can start seeing it eat away a bit," he says. "It's getting less comfortable, you're worrying more, starting to think about retirement. It's the uncertainty."

There was a time when the middle class - really, anyone who falls in between the rich and the working poor - occupied a wide and comfortable place in society. Until recently, it was a position that could be reached without grasping (often, without a university degree) and enjoyed without too much worry. It meant a stable job, a house with a yard, a two-car garage and perhaps a nice pension. But it's getting to the point where having all of that could make you the envy of your neighbourhood.

Economists have been anxiously watching the middle class lose ground for years, and now its members are in free fall. As the Canadian economy unravels, jobs like Bragnalo's are being lost by the thousands every month. More than 70,600 jobs vanished in November, and 34,400 followed in December - the majority of them the kind of solid manufacturing and resource sector jobs that were once the backbone of the Canadian economy. And there are many more losses to go. Tens of thousands of Canadians are now left wondering: where did the simple life go? And is the middle-class dream dead?

There are various definitions of precisely who is middle class. The simplest is those who fall in the middle third of the income distribution. In Canada, that's a broad category, with incomes ranging from as low as $35,000 (which is above the cut-off for a low-income family of four living in a large city) to as high as $90,000. During the early post-war decades, this was a group that, generally speaking, was brimming with optimism. Incomes were rising, and there was no reason to think they'd stop. But when sociologists and economists talk about this group today, they inevitably point to one very troubling trend: over the past 25 years, middle-class incomes have not grown at all. In 1980, the median family income was $58,000. In 2006, over a quarter of a century later, that number had actually dropped to $57,700. (Both figures are expressed in 2005 dollars to remove the effects of inflation.)

That doesn't mean everyone has been treading water, though. As if to add insult to injury, while median incomes have stagnated, those of the wealthy have been shooting up. "If you look at the income distribution of the whole, the winners over the past 25 years have been the people at the very top," says Charles Beach, an economist at Queen's University. "In the '50s, '60s and '70s, the view was that rising tides raise all boats." But lately, "the only boats that have gone up much are the ones at the very top end of the income distribution." Between 1992 and 2004, for instance, the average income of the top 10 per cent of families has jumped by 34 per cent, or by $55,000. For the top five per cent, according to a report from the Canadian Centre for Policy Alternatives, the average income has jumped by almost 44 per cent.

Not surprisingly, as the incomes of the wealthy have been rocketing up, middle- class families have been earning a smaller and smaller piece of the pie. In 1972, the middle 60 per cent of families accounted for about 57 per cent of all income earned in Canada. By 2006 that number had dropped to 53 per cent, says Roger Sauvé, president of People Patterns Consulting.

It gets worse. Not only is the middle class earning less compared to those higher up on the wealth scale, but they're working harder for what they get. For proof, look no further than the long hours families now work to maintain their middle-class existence. The number of two-income families has soared to well over 70 per cent, from just 30 per cent in the 1970s. That means in most households, both parents need a job to pay the mortgage - so they are logging twice the work hours to maintain a standard of living that was easily affordable on a single income a few decades ago. Plus, having two working parents often necessitates extra costs like child care, which can run upwards of $10,000 a year per child, and a second car to commute to two jobs. At the end of the day, even double incomes aren't the panacea they once were.

If you bravely try to build a one-income family - of the sort that were commonplace in the 1960s - a middle-class life might be out of reach altogether. According to the Organisation for Economic Co-operation and Development, the poverty rate for a family with one income earner in Canada is a whopping 21 per cent, compared to just four per cent if two people work.

Earning a slice of the middle-class lifestyle is fast becoming an uphill battle with modest rewards. One Vancouver teacher says that at one time, he and his wife, who's also a teacher, would have had the kind of household income that put them into the realm of the upper class. But in the current economy, they can't even afford what has become a luxury item in their city: their own home. "That two professionals, at a decent point in their careers, can't afford a starter house in Vancouver - that's frustrating," he says.

The truth is the middle-class squeeze has been happening for decades, but it's been hidden from view and papered over by a buoyant economy. As long as UNEMPLOYMENT was low and credit was easy, middle income earners could fool themselves into thinking that they were making progress. If they didn't have the money for a bigger home or a second car, they could always borrow it. It helped that electronics and other imported goods from places like China were getting cheaper and cheaper, helping stagnating middle-class dollars to go farther.

But now the economy is in recession. The illusion is collapsing, and the plight of the middle class has been laid bare. "Household debt suggests that middle income families have run out of gas," says Hugh Mackenzie, an economist and research associate with the Canadian Centre for Policy Alternatives. They're "working more to maintain their standard of living and are basically consuming the equity in their homes."

In the U.S., that much has become painfully obvious. Last year alone, there were 2.3 million foreclosure proceedings. And while Canada's housing situation is not nearly so severe, an 11 per cent drop in year-over-year house prices as of December plus recent job losses suggest that we're following the U.S. into a period that will take a heavy toll on the middle-class way of life.

What makes the prognosis especially bleak is that economists say the middle class might not rebound when the recession is over. "If you look back at what happened in the last two severe recessions [in the early '80s and '90s], you find that both the real incomes of the middle class declined, and the share of middle-class incomes declined," says Beach. But when the recessions ended, those job losses were largely recouped. This time around, not only are the jobs disappearing, but the plants that supported them are closing too. "People don't get recalled to work at jobs where the plant doesn't exist anymore," says Mackenzie. Because of that, economists say that real recovery in income and job losses could be a decade away.

There's never a good time to lose your job, but for those unlucky enough to fall from the comfort of the middle class, getting back in is now harder than ever. Troubling signs are beginning to emerge that there's less mobility between the working poor and the middle class than there used to be, so once you're out, it could be for life.

Certainly that's been the experience of Dave Chiasson. Three months ago, he was laid off from his job at AGS Automotive in Oshawa, where he worked making bumpers for Chrysler and General Motors. At age 47, he went back to school to get his Grade 12 certification. Now, he's thinking of enrolling in a college program to learn a new trade. He hopes to sign on to a government program that will provide him with some financial support while he goes back to school. But he worries that won't be enough. He says he still might have to sell his house, where he's currently living with his wife and son, to cover all the costs. His wife works a clerical job at a medical clinic ("Thank God," he says), but even so, without his job, life will suddenly get much harder.

In fact, the rising cost of education is quickly becoming one of the biggest barriers between the poor and the middle class. It can make earning a professional degree nearly impossible for the working poor. Even for the middle class, it can be a challenge. The yearly tuition fees for medical school are now more than $15,000, triple what they were just a decade ago. Even the cost of a basic undergraduate degree has skyrocketed. Twenty years ago, sending a child to university for a year would have cost roughly $5,000 (with tuition and living expenses). Today, it's upwards of $12,000, says Mackenzie. Meanwhile, financial aid for students is getting increasingly scarce. The cut-off level for university loans and bursaries is now "well below what people would consider to be a middle-income level," Mackenzie says.

In countries like Canada, the government has historically played an important role keeping the hopes of many middle-class families afloat. But as social programs have been cut back, many middle-class families have been left in the cold. Employment insurance programs, for instance, are harder to get, last for less time and pay less, says Lars Osberg, an economist at Dalhousie University in Halifax who studies income inequalities. "So there isn't anything like the safety net that existed in the last two really big recessions." Canada, in fact, now spends less cash on unemployment and family benefits than most developed countries, according to the OECD.

Chiasson is seeing all of this first hand, but he's stoic about his situation. Even before he was laid off, he had been feeling the squeeze growing tighter for years. Now he doesn't hold any illusions that a return to the good old days is right around the corner. When he first started working for AGS 23 years ago, life was good. With overtime and other incentives, "you could write your own paycheque," he says. But for much of the last decade, his pay has been frozen at about $20 an hour. "It's been a slow wind-down for the last six years or so," he says.

Like millions of others, he's slowly realizing that the things he used to take for granted - the house, the cars, the little front lawn - are now only promised to a smaller group of educated professionals that he's not part of. Certainly, he's not banking on ever making a good living in the auto sector again. "I would think those days are gone."


Maclean's February 9, 2009